Uber’s new pricing system charges customers what it predicts they would be willing to pay

UBER has made making big changes to its pricing system and it could be bad news for those living in certain suburbs.

IMAGINE you live in Sydney’s most popular suburbs, while your friend lives in one the city’s less popular regions.

You both order an Uber home at the same time, with each ride having identical demand, traffic and distance travelled.

Yet, you are charged significantly more for the service because of where you are travelling.

This could one day be a reality with Uber introducing “route-based pricing” — a new fixed rate fare system for its UberX service that charges customers based on what it predicts they would be willing to pay.

Using machine-learning techniques, Uber was able to discover customers would happily pay a fixed-premium to travel some high-demand routes — basing the new pricing from this data.

While this might sound like the service is separating its customers based on income, Uber’s head of product Daniel Graf said this wasn’t the case.

“This is not personalised. This has nothing to do with the individual,” he told Business Insider.

Instead, Mr Graf insists the price increase would only be applied to popular routes and would only affect those who are already happy to pay for the more expensive Uber X service.

Uber is using data science to predict fares, which could see you paying more.

“The fares have to do with the demand you see on the route,” he said.

“We don’t know what wealthier parts of towns are. We don’t take anything related to wealth or any other characteristics into account. All we look is what are the demands for our different products. That is all it is.”

Mr Graf said while customers can expect to pay more for using fixed rate route-pricing, drivers will not receive any extra money — they will continue to be paid based on distance, applicable surge pricing and incentives.

“What we want for drivers is consistent earnings,” he said. “If we don’t have reliable and consistent earnings, what are they going to do? They’re not going to drive for Uber.”

Instead of giving drivers their share of the extra money from route-pricing, Uber will reinvest it into incentives for both customers and drivers.

Currently, route-based pricing is limited to 14 US cities with both UberX and UberPOOL services — Uber has confirmed there is no immediate plans to roll this out in Australia.

Do you think Uber should charge more based on where you are going? Continue the conversation in the comments below or with Matthew Dunn on Facebook and Twitter.